Part 3 of Regulating Green Series--To LEED or Not To LEED

One of the primary considerations in regulating green in whether to incorporate a third party green building standard, like LEED, National Association of Home Builders Green, Green Globes, etc. into the regulations.  In addition to determining whether to include a third party standard, regulators must also consider which standard to use and whether to mandate certification.  There are pros and cons to each choice which regulators concerned about crafting great green regulations should carefully consider.

1. Third Party Standard, Proprietary Standard or Hybrid?

 There are three regulatory models currently being used to determine whether a project is "green".  One is to reference a third party standard like LEED or Green Globes--if a project meets LEED Silver criteria, it receives a 10% tax credit.  Another mechanism is to create proprietary green criteria--setting out targets for energy efficiency, water usage, etc.  Finally some government entities, like Boston, use a hybrid model, tacking on specific green targets on top of a third party rating system. 

The third party rating system is easy and inexpensive, but gives local regulators the least control.  What if the third party sets a requriement which is illegal or preempted? What if the third party sets a requirement which is inappropriate or impossible for your local conditions?

The proprietary system requires the most in house expertise.  The regulators in charge of setting the green targets must understand sustainability and legal drafting very well to make this work.  Also, the system must be updated to keep pace with the rapidly changing innovations in the green building industry. 

The hybrid model works well to include local considerations into the  green criteria, but does not solve the issue of lack of control over the rating system.

2. Which Third Party standard? 

The Leadership in Energy and Environmental Design (LEED) rating systems from the US Green Building Council, a non-profit organization, is the most common rating system incorporated into green regulations.   Energy Star, a government sponsored system, is also common.

Some regulations, in an attempt to be neutral, state that projects need to meet LEED "or equivalent" standard.   Which standard is equivalent to LEED may be difficult to determine, but NAHB Green and Green Globes are the likeliest candidates. Nonetheless, LEED is still the baseline against which the other standards are measured, so LEED becomes the de facto standard.  

3. Certification or no? 

Finally, local governments need to consider whether certification as "green" by a third party is a requirement of the regulatory scheme.  For example, many municipalities make access to tax credits contingent upon acheiving LEED certification.  For voluntary financial incentives, this is not as big of a legal pitfall, although the monetary and transaction costs association with certification may reduce the number of green projects being undertaken.  However, mandating certification by a private third party could run into legal hot water.  For example, the USGBC is under no legal obligation to certify buildings within a specified period of time, or at all.  If the developer could not get a certificate of occupancy without the certification, the developer might sue the city.  Municipalities have gotten around this by having projects submit third party rating system checklists for review by building officials, without requiring certification.  This requires adequate capacity for understanding the green building criteria within the relevant government entities.